Proposed Rule to Stop Payday Lending Debt Traps Released
After more than a year, the Consumer Financial Protection Bureau today is releasing a much-anticipated rule to regulate the payday lending market
NCLR has long supported a strong rule that will take Latino consumer perspectives into account, and which will keep predatory products and practices off the financial market. To better understand why such a rule is necessary, we have shared stories in our Truth in Payday Lending: Stories of Latino Borrowers blog series. Truth in Payday Lending takes a closer look at how real Latinos have fallen victim to payday lending debt traps and the challenges they face to get out of them.
Many of the people whose stories we shared had many common bonds. They are all struggling to make ends meet, but their options for safe and affordable financial products, especially in the form of small-dollar credit, are often limited. While payday loans offer them the promise of relief, they are structured to keep consumers in a cycle of borrowing and debt—and until now, no one has regulated this market.
That begins to change today. Now that the payday lending rule has been released, it’s critical that we work together to lift up the concerns of consumers to drown out the inevitable loud protests from the payday lending industry. With the proposed rule finally out, we enter an automatic 90-day public comment period to allow you the chance to weigh in on the issue.
The proposed rule is a very positive step forward to curbing predatory payday lending, but there are still areas that could be further strengthened. For example, we strongly believe the ability to repay a loan must apply to all loans covered under this rule, no exceptions. We also think the rule should establish a maximum amount of time a borrower can be in debt, such as 90 days in a 12-month period.
During the course of this comment period, we will be reaching out to you and the rest of our NCLR Action Network to guarantee as many voices from concerned consumers as possible are heard. You can show your support in a few ways:
- Leave a comment in support of the rule.
- Take action via the NCLR Action Network.
- Share your own payday lending story with us and help us show the harm that has resulted from a lack of strong consumer protections around payday and similar loans.
- If you are coming to the NCLR Annual Conference in Orlando, be sure to stop by the NCLR Advocacy Central booth, where you can learn more about our efforts and sign our petition.
For too long, unregulated and predatory payday products have filled a need for credit, but have drained income from hardworking Latinos and other consumers. Consumers should not end up in financial ruin as a result of taking out a loan. We need strong regulations in place that will keep harmful products like predatory payday loans out of the financial marketplace. Please stand with us in supporting CFPB’s rule to end the payday loan debt trap.
